Your Right to Know

WASHINGTON — Faced with a looming July 1 deadline, the Senate was unable to reach a compromise
on student loans tonight, which means interest for subsidized Stafford loans for hundreds of
thousands of students will double next week.

Although Senate Democrats pledged to have a floor vote on a revised approach after the July 4
recess that would extend the current low rates of 3.4 percent for one year and make them
retroactive to July 1, there is no guarantee that bill can pass the Senate or the House.

“If we don’t act by Monday, 7.4 million students nationwide will see their interest rates
double,” said Sen. Kay Hagan, D-North Carolina, adding that this would “effectively stick those
students with an extra $1,000 a year each of additional loan costs.”

At a news conference today, Hagan and Sen. Jack Reed, D-R.I., unveiled the revised approach.
Their bill, which won the backing of Sen. Sherrod Brown, D-Ohio, and more than 30 other senators,
would be voted on after lawmakers return from the July 4 recess.

“There’s a lot of activity out there and people upset but we can’t get the House to do
anything and enough Republicans in the Senate just want to let the interest rates go up,” Brown
said. “Whatever formula they're proposing, the interest rates are going to go up significantly
under their plan.”

Taylor Stepp, president of Ohio State University’s undergraduate student government, said he
was “really frustrated because it seems like they are playing politics on this issue.”

“With the rising costs of college, students can’t be expected to pay a few extra thousand
dollars in debt a year.’’

The uncertainly is what’s most difficult for students, said Martin Maliwesky, dean of
enrollment services at Columbus State Community College.

“Autumn semester is just around the corner, and not knowing the rate makes it hard for
students to know how much they can realistically afford to borrow,” he said.

Until a decision is reached, Ohio University’s financial-aid director Valerie Miller is
advising students to expect the worst: a doubling of the rates. About 67 percent of the
undergraduate students at OU take out a Stafford loan, she said.

Still, Miller is hoping for the best and grateful that the debate has focused a national
spotlight on the need to reign in college costs and increase student financial aid.

The House in May approved its version of the bill, tying the interest rate to a formula made
up of the 10-year Treasury note plus 2.5 percent. The House bill would cap interest rates at 8.5
percent.

At a news conference on Capitol Hill, House Speaker John Boehner, R-West Chester Twp.,
charged that “interest rates on student loans are about to double because the president and Senate
Democrats won’t resolve this impasse.”

But Sen. Rob Portman, R-Ohio, and other lawmakers suggested a compromise would be reached
after the recess.

“If you look at the proposal from the White House and the proposal from Senate Republicans,
they’re very similar,” said Sen. Rob Portman, adding that both plans go “to a market-based interest
rate that helps all students, not just subsidized Stafford loans but all of them. We’re not far
apart.”

Portman last night backed an alternative introduced by Sen. Joe Manchin, D-W.Va., and which
is co-sponsored by Republicans Lamar Alexander of Tennessee, Tom Coburn of Oklahoma and Richard
Barr of North Carolina, and Angus King, an independent from Maine.

The Manchin bill would tie student loan interest rates to the 10-year Treasury note and an
additional 1.85 percent for undergraduate Stafford loans.

Sen. Tom Harkin, D-IA, charged that this proposal would only burden students with more
student debt in the long run, saying that “every single loan program under the Manchin proposal
will charge higher interest rates than we have seen in the past” after just a couple of years.

It’s not just up to the federal government to reign in student debt, said Bruce E. Johnson,
president of the Inter-University Council of Ohio, which represents Ohio’s 14 four-year public
universities.

Schools also need to cut their costs and the state should provide better tax incentives so
more families save money for college.